DEBTWATCHHBG

The people who lobbied and pushed to extend the ban on bankruptcy are some of the same working to award those who GAMED the public finance system. Their efforts are aiding and abetting those who KNOWINGLY prepared, submitted and signed false certifications to DCED to get public finance deals approved. Without those purposeful deceitful steps, the law could not have been thwarted, the debt could not have been approved or incurred and, therefore, this public crisis would not exist.

The forensic audit and its supporting documents suggest that creditors directly participated in gaming the system, for their own benefit. Thus, they too must bear some consequences for their role in this wrongdoing. Your approach and your answer lets them go on their way, business as usual.

Those who labored so diligently to mask the true nature of these public transactions must be seen as having “unclean hands” and so, their tainted claims should be barred from any court and rejected by responsible government officials.

Sir, it should not be overlooked that your position happens to mirror the statements being offered by those trying to upend accountability for gaming our system and those public faces who speak for them. Why is that?

Your constant advice in this crisis has been essentially this: just cooperate. You have made the point, again and again. In this circumstance, it is very bad advice. There are times in life when cooperation is nothing more than capitulation to those who would use power for their own personal ends. This is such a time.

Sir, you're on the wrong side of the argument and, time will show, the wrong side of history.

The conflict that is playing out between the Harrisburg City County and the Pennsylvania Office of Receiver finally hints at a test of the very basic questions of law, policy and governance that swirl around the Debt Crisis.

Pennsylvania law has long recognized “Dillon’s Rule” that generally acknowledges that a local government is merely an instrumentality of a State, the body politic that is a true sovereign. Translation: State is always top dog.

On the other hand, the Pennsylvania Constitution expressly recognizes certain rights of municipalities and so created limits on State government powers over municipal governments.

Now, the Office of Receiver has moved to have City Council comply with the Recovery Plan that was preliminarily approved by the Court under the new scheme of governance adopted by the State last Fall. The new parts of the law impacting certain distressed local governments – but of course, really only Harrisburg – appear to permit a Receiver to both (1) ORDER local officials to take specific actions that are part of a Recovery Plan or necessary steps to implementing any part of a Recovery Plan and (2) Request a Court to Order any local official(s) to comply with a specific Order of the Receiver or part of a Recovery Plan through an Action in Mandamus. Translation: Receiver can sue to get his way.

A part of the Preliminary Recovery Plan approved by the Court refers to City Council raising taxes. But the new law also says a Receiver cannot “unilaterally” raise taxes.

So the questions get hard to answer now. How can a Receiver ask a Court to enter an Order requiring local officials to follow the Receiver’s Order to raise taxes when the Receiver has no power to raise taxes?

More fundamentally however, is this question: If a State can pass a law that means the State can tell local elected officials they MUST introduce and vote YES on certain pieces of local legislation, then why does local government exist? At this point, the State is treating local elected officials as if they are employees working at a State Agency. If the State really has that power, then local government really has no power. If the State really has that power, why pretend that local governments represent the will of local citizens? Why are we burdened with an expensive, extra layer of government? Why not open a Pennsylvania Bureau of Cities that controls Harrisburg and all other Cities? Why pretend local citizens have any say on local taxation or anything else?

However, if the State cannot tell local officials what laws to introduce and approve – if that is forbidden by our Constitution – then the entire legislative scheme of receivership appears suspect. How can the State create an Office that has powers the State cannot exercise?

The questions go to whether each citizen of Pennsylvania is entitled to be represented by local elected officials, whether in Harrisburg, Philadelphia, York, Hazleton, Lancaster, Pittsburgh or Pillow. If local governments are just a convenience for the State, then somehow the State government itself and not the people of Pennsylvania hold all the cards. Translation: The people are just here to be left holding the bag.

To use a modern cliche, this piece offers a quick view from 20,000 feet. The snapshot captures some detail, but only touches the surface of the story.

Each step into the pool of debt involved specific individuals, arms of government and private businesses. Each deal created specific benefits for specific people and business interests. Once knowledgeable and capable people in those deals knowingly decided to cross the line from working on public deals that complied with the law to public deals that could be made to appear to comply with the law, the process was irrevocably corrupted. Firms and individuals were allowed to profit by agreeing to go along with deals that depending on deceit and, thus, a bottom-feeding industry came to flourish. That is the story. Please, report it.

We understand that PN Editorials are decided by majority rule, so we don't know if the Editorial Board was unanimous on this evolved view. But regardles of whether this position rises from a simple majority or all of you, let us just say: Welcome to the fight!!!

We ask that you re-read the comment made by Debt Watch Harrisburg. The concern we voiced was about Bob Kroboth's two (2) bosses, who management styles each allowed this situation (and so many others) to spin far out of control. According to the testimony at various Budget and Committee meetings, Mayor Reed allowed for huge unfunded benefit payouts to be accrued by a number of his managers, even allowing such employees to add six (6) additional days or so to the prior year's benefits for a manager who did not use any of their sick days. Since a manages could use their unlimited, accumulated comp time to take time off work, many never had to use their sick or vacation days. That lead to the many huge payouts.

That scenario shows mismanagement of public funds by Mayor Reed because: (1) the benefits were allowed to grow without being budgeted or pre-funded; (2) he failed to adopt a "use it or lose it" limit of comp time or accumulated time off, allowing large blocks of deferred benefits to grow indefinitely while employed; and (3) he failed to cap the accumulation or use of comp time. That is just short-sighted mismanagement, far outside the norm for managing payroll and benefits.

As for Mayor Thompson, she re-hired Mr. Kroboth not long after he departed the Reed Administration, first as a transitional consultant (which made some sense), but then, just a few months after his original departure, reactivated him as a full time City employee. The offer to re-hire was made without any requirement (or at least any publicly reported requirement) that the former employee be restricted in collecting any deferred funds while employed (just like other Reed Administration employees still on the payroll). That should have been the obvious condition imposed before allowing the a former manager to return to the job.

We specifically commented that Bob Kroboth appeared entitled to the money. Our point was that Mayor Reed and Mayor Thompson were both irresponsible in their respective handling of public monies.

This mismanagement of public monies demonstrates the mismanagement of our City government. That past conduct must be reconciled and the present practices must be reformed. Otherwise, we all will be left with a very bleak future. So the issue of handling City funds -- past present and future -- remains the concern of Debt Watch Harrisburg.

This information is very well known among those who reveiw the City's budgets, financial issues and staffing. It has been a topic - from one angle or another - at many public meetings. The original payouts were to be upon retirement or departure of employees, but there were so many retirements after Reed lost, there wasn't nearly enough most money to meet the obligations.

Someone came up with putting a cap of $75,000 payment per year toward a departing employee's "banked" benefits. That is why Bob Kroboth and a few others are still receiving annual lump sum payments toward what they were owed under the City policies under Reed.

Creating that system was reckless and fiscally irresponsible. It was one of many bargains made under the former's Mayor's reign that mortgaged the future to maintain an illusion that the City was financially healthy.

You are right to be suspicious and disgusted. The insider political-financial class seems to have rationalized that it is others who are wrong to question, yet alone challenge, the way they get things done. They seem to celebrate what they see as their own insight, knowledge and wisdom for accomplishing things with public money, unable to recognize that their version of "the cost of doing business" is little more then the graft, bribery and outright theft that all condemn in third-world dictatorships.

No matter the path or climb traversed by the well-entrenched, there is but one symbol on their collective moral compass -- all roads must lead them each to "$$$". It is the only way they know.

Dave Unkovic's approach was subtle in many ways, but it should be impossible to overlook a key element to the overall solution that you have not mentioned. Accountability.

The joint venturers in the financial deals swirling around the failure-plagued incinerator project -- the political figures, public bodies, financial firms, legal advisers and insurer who KNOWINGLY went forward out of self-interest must be required to take a huge hit for their willful mishandling of public funds and projects. That is a key, very real element of a solution, one (1) which must be compelled if they each do not voluntarily surrender their just share.

All should question whether that element has been blocked, leading Mr. Unkovic to the conclusion that he was "no longer in a position to effectuate a solution."

cd3. Note that he had just got back from reviewing the partial findings of his legal team on the forensic audit, stating more review & analysis was still needed to decide if civil claims can be filed, noting that it's a complex legal analysis. So, before today, he had finally received some assessment from counsel on what that audit document tells us from a legal view. That seems an important factor.

Second, he basically asserted that he preferred not to spend his time fighting, but if a fight is what is required, so be it.

It appears some officials, past and present, and their henchmen, do not want the past unearthed and so brought the fight to him, both via the back door and to his face. He will not be run over.

FYI. At presser, Patriot reporter said he had interviewed Sen. Piccola yesterday, who said Mr. Unkovic should not be out at community forums and should not have said what he said in federal court last week (when, btw, he was under oath). The info was part of a question to see if the Receiver had a responsive comment. Unkovic declined, but the report of what Piccola said to PN speaks volumes.

cd3 You're barking up the wrong tree on this one. It was the AGM and County who have pushed and fought to get a person of their choosing to be a receiver over the Incinerator and they were the ones grousing about the open, so far solid process used by Mr. U in asessing the value and genuine interest in the Incinerator.

The County Judge did NOT remove him from Control. That is not what te Order says. The recent Order added yet another layer to the already complex mix. If the Judge's Order stands, it puts a receiver over the Incinerator only, while the Commonwealth Court and Governor have already made Mr U. a Receiver for the City and placed the entirity of the Authorities formed by the City under his control. Importantly, the Order appears to have a plain error on its face, so some clarification or reconsideration by the County Court is clearly required.

Today, he simply requested an invetsigation be undertaken. If one is already underway by the feds or the AG's office, he simply is addng his important voice to the chorus who has been screaming for law enforcement to enforce the law.

We are living witnesses to a sad but oft-recurring historical tale. More and more people in Central Pennsylvania are finally awakening. They are opening their eyes and seeing, to their own shock and dismay, a reality that so many folks in so many towns came to recognize as they too finally looked upon their own great chieftains: the emperor had no clothes. It's been a long time coming, Harrisburg.

2. Courts have said in the past that the denial of constitutional rights is a harm in of itself.

3. The debts were incurred in a series of transactions involving elected public officials, appointed public officials, private financial institutions, licensed professionals and others. It appears from the forensic audit that every penny owed right now the Incinerator Debt was the result of misrepresentations as to the nature of the debt. If the debt had been presented for what they all knew it to be -- pure general obligation debts that had no sufficient source of revenue for repayment -- the debt could not have been underwritten, incurred or insured. Our State Constitution would have forbidden it.

An educated guess would suggest that these dollars figures have been grossly underestimated or understated!!!! There were multiple lawyers present in the federal courtroom for these public bodies on multiple occasions from multiple firms. At one proceeding alone, the City had 4 attorneys appearing in person or by phone from Tucker firm; at least 1 from their litigation firm; and the Acting Solicitor. The County has attorneys from at least 2 private firms. THA had attys from at least 2 private firms. The Council had Mr. Schwartz and maybe an assistant. Many of these attys would have conferred at times along the way. Someone is not being forthcoming or lots of lawyers worked for free. Which answer makes seems more likely?

Just like in medical billing, attorney billing can result is different lawyers or firms describing work of the same case under very different headings or categories. Someone might accurately identify their work as "case monitoring" or "consultation of general litigation matters" or "bond analysis" or "review of draft materials" or some other description. It will be very hard to calculate exactly how much public money has been spent on outside counsel, but surely it has been more than enough to justify bringing such matters in house to save tax dollars!!!

What the Administration failed to do was the necessary work, which anyone would have to do before arriving at a workable solution. A majority of CC apparently reached a similar conclusion and, pushed into a corner, now seek to fight their way out. Yet they do so as officials across the board are arguing over who has the right to use or invoke any given sentence of any given law, and over who must honor which law. That such fights are judged to be necessary reveals how deeply fractured our system of government has become, at the local, county and state level.

Please feel free to enlighten everyone with your expertise and knowledge of how a contested Chapter 9 bankruptcy works. Our group has been reviewing the potential issues for some time and, we have been fortunate enough to have collectively sat through briefings and explanations by bankruptcy specialists from roughly a dozen firms and institutions. With the exception of one or two individuals who quickly outlined their views , the consensus has been that a contested filing is anything but fairly simple. So please, show all of us the way.

TO PATRIOT NEWS: Your headline and opening have taken our statement out of context, giving it a different meaning than it states. Or maybe it was just poorly composed, so hope this clarifies matters.

The City of Harrisburg has been forced to collapse into Bankruptcy. DWH did not say the filing itself defies rational explanation. The filing is the almost inevitable result of a failed process.

The government of the City of Harrisburg has not made the preparations that a municipality would normally make to enter Chapter 9. That work should have been done by the administration, in concert with the rest of local government. We have consistently urged "preparation for bankruptcy" as the best way to avoid having to file for bankruptcy. That lack of preparation is what defies rational explanation.

The efforts to prepare the City to address it creditors did not occur prior to Act 47, though those efforts were possible. The efforts did not happen through the Act 47 process as the City government deferred work to await a Coordinator's Plan. The coordinator did not take such steps, though they could have moved matters in that direction. It again failed to happen through the issuance of the Mayor's Plan.

Now, it has become clear that the City was never going to be able to undertake or complete those preparations, as the time to do so passed without action. That leaves the City left to fight inside the Bankruptcy process while at the same time working to prepare a proposed Chapter 9 Plan.

A City Council is not the body that normally would have undertaken that necessary preparation work. That work in any municipality would be done by the administration. The administration, even if it wanted to avoid Chapter 9, should have prepared for it under the known circumstances. They did not. There is no excuse for such a dereliction of public duty in the face if the Debt Crisis.

Each level of government involved is duty bound to represent the citizens within their boundaries. For City taxpayers, that means each level has been duty bound to fairly represent our needs. We are NOT asserting that all public officials have ignored the needs of the citizens and taxpayers. But at each level of government involved, there have been officials who have prevented the best interests of Harrisburg and Central Pennsylvanian taxpayers from being given proper weight and consideration. That is a systemic failure and a main reason that we have been forced through the doors of the Bankruptcy Court, woefully unprepared.